I'm not so sure all of this is new. The COF, IS and other affinity groups for foundations have never - collectively - accounted for more than 4-5% of all foundations. The majority of US foundations have always been tiny and hard to find.
How the game has changed:
• There are more foundations, but many are small and not easy to find with traditional search engines like the Foundation Center
• There are new informal groupings of donors outside of traditional organizations like the Council on Foundation or the Independent Sector
• Most importantly to social entrepreneurs, many new, younger foundations are as interested in investing as in donating. This can translate into start-up funds for NPO business ventures, requirements for partnerships that include a private sector firm, or simple willingness to take a chance with a grant to launch a revenue stream.
I'm also sure there are some new things that aren't mentioned in this post and that should be.
For example, donors have been flocking to donor advised funds in droves for over almost two decades now. There is now more than $19 billion in donor advised funds in the US; DAFs are available from every kind of vendor - Fidelity to Harvard to your local community foundation to your house of worship. These funds are very hard for NPOs to find.
Leadership change at large foundations matters. The SocialEdge post points to the pending new president at Ford - other large foundations getting new leaders include Rockefeller (2 years ago), Surdna, Gates (remember, Bill goes full-time into philanthropy on July 1, 2008), MacArthur likely in a few years, Robert Wood Johnson's president is relatively new, and so on. These changes do matter, but not for the reasons you might think. Historically, leadership change at large foundations has resulted - in the near term - in 1-2 year periods of internal direction setting and strategic planning. This often feels to NPOs as if the funders have shut the doors, drawn the shades and turned off the lights. So don't link "new president" with "new direction" right away. In the short term, "new leadership" is more likely to equal "everything is on hold." Lets hope the new leaders change this pattern.
I still think investing versus giving is somewhat in the eye of the beholder. Having listened carefully to Carol Thompson Cole of Venture Philanthropy Partners (a leader in the practice and reflection on the practice) speak about their first five years of work, it is clear to me that there is good "investing" and "not good" investing.
The former takes a lot of work, more so than even the VPP folks thought it would. Unexpected factors affect whether or not the effort pays off. For example, VPP learned the value of being place-focused. If this is really a factor in good social investing than we will either need to see a lot of long-haul, dedicated, place-based venture investors develop (in order to be of use to NPOs broadly) or we will see this develop in pockets (DC, SF, Boston area) where the investors are - which won't do much for other communities.
O'Heffernan raises some good questions and provides a start on answers. Here they are:
1. What should NPO's do to thrive in the evolving foundation world?
In general, expand your search horizons to go beyond your rational donors, engage in organizations, events and activities that an bring you in contact with new foundation staff, and be creative and entrepreneurial in the projects you propose.
2. How should NPO's react when they sense changes are coming in one of their major funders because new leadership is taking over?
I would research the new leader and then go meet with her/him and LISTEN, rather than talk. The purpose of the visit is to learn her/his worldview, not talk about your organization (unless you are asked, which you likely will be). That gives you what Americans call a "heads up" - advance notice of how to either reposition your organization or look for a replacement funder.
3. How do NPO's find new young donors?
Actually, it is getting easier, at least in the US. Go to the Chronicle of Philanthropy for a story on new young donors to get oriented. Then, check out Resource Generation, an organization that trains young donors. Taking It Global is an organization of young donors specifically aimed at giving internationally.
These are all good questions, but only answer #2 goes far enough. For questions number one and three, NPOs need to know (and go) beyond foundations. The very donors NPOs are looking for may be managing their giving through DAFs, giving circles, or from their kitchen tables. Looking for foundations - many of which are the equivalent of tax-exempt checkbooks - is hard, it needs to be done (FoundationSearch is a useful tool) - but its by no means enough. When thinking about these foundations, NPOs are well served to use the same strategies they use to find major individual donors. Most small foundations are the equivalent of a major donor - a single person, acting on their passion, following their heart or the information of friends, and getting hooked into "deal flow" through their existing networks.
How to find these folks? - lists of donors from like-NPOs; society pages; networking; LinkedIn; MySpace; SecondLife events, alumni mags - and every other tool ever available and now accelerated through technology. What's changed? The blur of individual donors, DAFs and foundations - they are often one and the same.
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